Tag Archives: Oracle’s

Oracle Cloud Infrastructure SVP shares competitive strategy

SAN FRANCISCO — Oracle’s late entry to the public cloud space has been met with skepticism, but the company has a few strategies, particularly around autonomous cloud, unexpected partnerships and shared responsibility, that executives expect to make up for its tardiness.

Oracle Cloud Infrastructure (OCI), the company’s second attempt at a public IaaS, was built with the help of former AWS technical employees like Clay Magouyrk, who joined Oracle in 2014.

Now senior vice president of engineering for OCI, Magouyrk spoke with TechTarget during Oracle’s OpenWorld conference about the company’s market position, its efforts to attract customers and what the future may hold.

A common refrain is that Oracle is very late — maybe too late — to arrive at a viable IaaS strategy. What’s your response to this?

Clay Magouyrk: I think you have to understand where we’re at in our evolution of the cloud. I remember when everybody had a kind of, you know, a dumb phone. And I remember it took two years to get to a place where everyone had a smartphone. The switching speed was amazing.

So then the question is, [the industry has] been doing cloud infrastructure for 15 years. Why isn’t it all [migrated over from on-premises] yet? It’s still 90% greenfield. One of the things I worked on at Amazon before I left was the Fire Phone, and the Fire Phone was too late, in the same way that the Windows Phone reboot was too late. Once Apple and Android had 90%-plus market share it was impossible [to catch up].

The reason I spend my day here every day working really hard is because we’re still at the 10% penetration [level]. People act like we’re 90% of the way into the cloud infrastructure transition, but we’re not anywhere close to it.

One of the biggest OCI announcements at OpenWorld was Maximum Security Zones, which you positioned as a response to data breaches at IaaS providers caused by misconfigured systems. But it doesn’t fully reject the shared responsibility stance around security forwarded by AWS and others.

Magouyrk: I think, fundamentally, in the long term, you always end up with some shared responsibility. What we’re trying to say here at Oracle is that we are going to push that boundary.

If you look at cloud in general, cloud providers have the responsibility of patching the hypervisor. And then, okay, your job is to patch your OS. Cool, well, with Autonomous Linux, now it’s our job to patch the OS. So we’re bringing that up the stack.

We’re going to create a construct where you can’t misconfigure it. We’re taking the stance that this is not just your responsibility, we are going to work with you on it.
Clay MagouyrkSVP, Oracle Cloud Infrastructure

If you look at the vast majority of security incidents these days, they’re not [committed by] massively sophisticated hackers. It’s misconfiguration. When you moved to the cloud, we gave you all these tools. And now you’ve got a million tools. And you have this programmable infrastructure. It’s so easy to do stuff, right?

We’re going to create a construct where you can’t misconfigure it. We’re taking the stance that this is not just your responsibility, we are going to work with you on it.

Think about it from our perspective on SaaS. We take on a ton of responsibility for that. There’s no way for you to mess it up. As we can make infrastructure to where you can’t mess it up, I don’t see any reason why we can’t take on more responsibility the same way we do in SaaS. The problem is that if people still need that control, to be able to mess it up, then it has to be on them.

You plan to dramatically expand OCI’s global footprint, bringing it to 36 regions by the end of 2020. Tell us about Oracle’s process here.

Magouyrk: There are things under the hood that people don’t see. One of those things is that we’ve massively optimized how we build regions, both from an infrastructure perspective, as well as a software perspective.

When I joined Oracle in 2014, we had zero OCI regions. I knew that if we were going to compete, we had to build regions that are way faster than our competitors. I knew how [AWS] built them, because I had worked there. And we hired people that also worked there. What we did is we took a much more aggressive approach.

Clay Magouyrk, SVP of Oracle Cloud Infrastructure
Clay Magouyrk, senior vice president, Oracle Cloud Infrastructure

The way most companies build these regions is you have 200 teams, and they all do it by hand. So the physical hardware gets rolled in, and the actual software teams spend all their time installing the stuff.

When you bought a Windows CD back in the day, Microsoft didn’t send an engineer to install it for you, right? They had an installer. Well, you can do that for the cloud; it’s a bunch of work. But we’ve made that investment from a software perspective.

If you look back to when Amazon got into this, they didn’t know where they were going. It was very early days. And they were like, we’re going to build these big honkin’ regions, and they’re going to cost a jillion dollars and there is going to be so much stuff there.

We realized, by the time I came to Oracle, we were going to need to put regions everywhere, but they’re going to start small and be able to grow. We’ve engineered for that. From a technical perspective, that gives us a lot more flexibility than some of our competitors.

It’s my understanding that Oracle is doing this buildout largely through co-location agreements and not actually building its own data centers, in the interest of speed. Can you elaborate?

Magouyrk: I think the term [co-location] has changed. If you go back 10 or 15 years, co-lo meant you get one rack in a small data center, that kind of a thing. But as you actually see these large cloud providers — the way they’re doing these worldwide rollouts — co-lo providers have actually changed their model. They still do that kind of retail stuff. But they also have a wholesale model. And that’s what has enabled a lot of this rapid global expansion.

Every major cloud provider uses a ton of colocation facilities. There’s just no way that it makes sense otherwise. As a co-lo provider, you can do things where you put stuff in a campus. You buy a bunch of land, and then you start small. But then, as that fills up, you build new buildings and you can deeply interconnect that with fiber. As a [co-lo] customer, you have this expansion plan in that same area, but you don’t have to build a giant data center [yourself].

One OCI announcement this week at OpenWorld concerned a new “always free” tier, which seemed clearly aimed at attracting developers to the platform. Tell us more about your efforts in this area.

Magouyrk: A lot of it is social proof. While we would like to think that everyone’s making a fully informed, highly educated decision, the reality is that most humans do close approximations based on what everyone else does. The key is to create a flywheel that gets enough going, and then it becomes oh, well, they all chose Oracle, why can’t we?

We have dedicated startup investments where we go to startups and give them a bunch of free credits and incentives. Around developers in general, we put a lot of energy into attracting people out of college. We work with universities to give them access to cloud computing resources. They use that in their classrooms to get people familiar with it.

I view [the free tier] as the start of something … Because it’s not just making it free, it’s making the signup easy, the support experience easy. Do you have the collateral and the ecosystem around it? Do you have the right forums for people to ask questions? You do all of those things in a row, and it builds.

The initial use case you put forward with your interoperability partnership between Microsoft Azure and OCI was to split an application up, with the logic and presentation tiers on Azure tied back to an Oracle database running on Exadata inside OCI. Why would a customer want to do that?

Magouyrk: When [Oracle CTO and chairman] Larry [Ellison] gets up there, and he’s like, look, let me show you the performance difference between what you can get from this versus an Exadata, I don’t think people actually believe it, but it’s true. There are all these amazing workloads that need giant relational databases that just can’t move anywhere.

My job is to get you in OCI and then just keep pulling more. Maybe you add some Analytics Cloud on top of it to analyze that data. You just get people hooked that way.

What about going further and bringing Exadata boxes right into Azure data centers? That would eliminate the need for the high-speed interconnect between OCI sites and Microsoft’s.

Magouyrk: As you can imagine, those types of conversations do happen in the abstract. I’m sure Microsoft would love that. The thing you have to understand is that we did a lot of work in Oracle Cloud infrastructure to make Exadata run well. We offer bare-metal; we offer off-the-box virtualized networking. There’s a whole bunch of features.

Let’s say that we were to make a deal and I gave Microsoft a bunch of Exadatas. It would be off in a little tiny part of the network. It’s not actually integrated into their experience. They wouldn’t have a database service wrapped around it. The experience would be terrible. For them, it’s not important [to host Exadatas].

For us, it’s so valuable that we make it really, really good. What we’re not going to do is take the thing that we think is incredibly valuable and then have other people do it badly.

What is next for this deal? Will we see others like it, say with Google? Going even further, is a détente between Oracle and AWS possible?

Magouyrk: Right now, we have great ideas, and we have good buzz, and we have very interesting customers. What we have to do over the next six months is convert those into a bunch of very happy, very public reference customers. That’s the next level of uptick in the process. Until we have that play out, I don’t think anyone’s going to know.

In terms of where we’re taking this with Microsoft, I think it’s about us working much better together. We’re making Oracle Linux work better in [Microsoft’s] cloud. A big part of the reason we chose them is because we have such customer overlap. It might be interesting, technically, for us to do it with Google. But it’s not like Google is already in every single one of our customer accounts. We’re doing this from a customer-driven perspective.

Go to Original Article
Author:

Oracle andVMware forge new IaaS cloud partnership

SAN FRANCISCO — VMware’s virtualization stack will be made available on Oracle’s IaaS, in a partnership that underscores changing currents in the public cloud market and represents a sharp strategic shift for Oracle.

Under the pact, enterprises will be able to deploy certified VMware software on Oracle Cloud Infrastructure (OCI), the company’s second-generation IaaS. Oracle is now a member of the VMware Cloud Provider Program and will sell VMware’s Cloud Foundation stack for software-defined data centers, the companies said on the opening day of Oracle’s OpenWorld conference.

Oracle plans to give customers full root access to physical servers on OCI, and they can use VMware’s vCenter product to manage on-premises and OCI-based environments through a single tool.

“The VMware you’re running on-premises, you can lift and shift it to the Oracle Cloud,” executive chairman and CTO Larry Ellison said during a keynote. “You really control version management operations, upgrade time of the VMware stack, making it easy for you to migrate — if that’s what you want to do — into the cloud with virtually no change.”

The companies have also reached a mutual agreement around support, which Oracle characterized with the following statement: “[C]ustomers will have access to Oracle technical support for Oracle products running on VMware environments. … Oracle has agreed to support joint customers with active support contracts running supported versions of Oracle products in Oracle supported computing environments.”

It’s worth noting the careful language of that statement, given Oracle and VMware’s history. While Oracle has become more open to supporting its products on VMware environments, it has yet to certify any for VMware.

Moreover, many customers have found Oracle’s licensing policy for deploying its products on VMware devilishly complex. In fact, a cottage industry has emerged around advisory services meant to help customers keep compliant with Oracle and VMware.

Nothing has changed with regard to Oracle’s existing processor license policy, said Vinay Kumar, vice president of product management for OCI. But the VMware software to be made available on OCI will be through bundled, Oracle-sold SKUs that encompass software and physical infrastructure. Initially, one SKU based on X7 bare-metal instances will be available, according to Kumar.

Oracle and VMware have been working on the partnership for the past nine months, he added. The first SKU is expected to be available within the next six months. Kumar declined to provide details on pricing.

Oracle, VMware relations warm in cloudier days

“It seems like there is a thaw between Oracle and VMware,” said Gary Chen, an analyst at IDC. The companies have a huge overlap in terms of customers who use their software in tandem, and want more deployment options, he added. “Oracle customers are stuck on Oracle,” he said. “They have to make Oracle work in the cloud.”

Gary Chen, Analyst, IDCGary Chen

Meanwhile, VMware has already struck cloud-related partnerships with AWS, IBM, Microsoft and Google, leaving Oracle little choice but to follow. Oracle has also largely ceded the general-purpose IaaS market to those competitors, and has positioned OCI for more specialized tasks as well as core enterprise application workloads, which often run on VMware today.

Massive amounts of on-premises enterprise workloads run on VMware, but as companies look to port them to the cloud, they want to do it in the fastest, easiest way possible, said Holger Mueller, an analyst at Constellation Research in Cupertino, Calif.

The biggest cost of lift-and-shift deployments to the cloud involves revalidation and testing in the new environment, Mueller added.

It seems like there is a thaw between Oracle and VMware.
Gary ChenAnalyst, IDC

But at this point, many enterprises have automated test scripts in place, or even feel comfortable not retesting VMware workloads, according to Mueller. “So the leap of faith involved with deploying a VMware VM on a server in the corporate data center or in a public cloud IaaS is the same,” he said.

In the near term, most customers of the new VMware-OCI service will move Oracle database workloads over, but it will be Oracle’s job to convince them OCI is a good fit for other VMware workloads, Mueller added.

Go to Original Article
Author:

The roots of Oracle’s cloud evolution: A 20-year review

Oracle’s strategy going into 2020 is to support users wherever they are, while not-so-subtly urging them to move onto Oracle cloud services – particularly databases.

In fact, some say its Oracle’s legacy as a database vendor that may be the key to the company’s long-term success as a major cloud player.

To reconcile the Oracle cloud persona of today with the identity of database giant that the company still holds, it helps to look back at key milestones in Oracle’s history over the past 20 years, beginning with Oracle database releases at the turn of the century.

Oracle releases Database 8i, 9i

Two major versions of Oracle’s database arrived in 1998 and 2001. Oracle Database 8i was the first written with a heavy emphasis on web applications — the “i” stood for Internet.

Then Oracle 9i introduced the feature Real Application Clusters (RAC) for high-availability scenarios. RAC is a widely popular and lucrative database option for Oracle, one it has held very close to date. RAC is only supported and certified for use on Oracle’s cloud service at this time. 

With the 9i update, Oracle made a concerted effort to improve the database’s administrative tooling, said Curt Monash, founder of Monash Research in Acton, Mass.

“This was largely in reaction to growing competition from Microsoft, which used its consumer software UI expertise to have true ease-of-administration advantages versus Oracle,” Monash said. “Oracle narrowed the gap impressively quickly.”

Timeline: These 10 milestones marked Oracle's path to modern cloud computing
These 10 milestones marked Oracle’s path to modern cloud computing

Oracle acquires PeopleSoft and Siebel

Silicon Valley is littered with the bones of once-prominent application software vendors that either shut down or got swallowed up by larger competitors. To that end, Oracle’s acquisitions of PeopleSoft and Siebel still resonate today.

The company launched what many considered to be a hostile takeover of PeopleSoft, the second-largest software vendor in 2003 after SAP. It ultimately succeeded with a $10.3 billion bid the following year. Soon after the deal closed, Oracle laid off more than half of PeopleSoft’s employees in a widely decried act.

Oracle also gained J.D. Edwards, known for its manufacturing ERP software, through the PeopleSoft purchase.

The PeopleSoft deal, along with Oracle’s $5.8 billion acquisition of Siebel in 2005, reinvented the company as a big player in enterprise applications and set up the path toward Fusion.

Oracle realized that to catch up to SAP in applications, it needed acquisitions, said Holger Mueller, an analyst with Constellation Research in Cupertino, Calif., who worked in business and product development roles at Oracle during much of the 2000s.

“To cement ownership within complex CRM, they needed Siebel,” Mueller said. Those Siebel customers largely remain in the fold today, he added. While rival HCM software vendor Workday has managed to poach some of Oracle’s PeopleSoft customers, Salesforce hasn’t had the same luck converting Siebel users over to its CRM, according to Mueller.

Oracle’s application deals were as much or more about acquiring customers as they were about  technology, said Frank Scavo, president of IT consulting firm Strativa in Irvine, Calif.

“Oracle had a knack for buying vendors when they were at or just past their peak,” he said. “PeopleSoft was an example of that.”

The PeopleSoft and Siebel deals also gave Oracle the foundation, along with its homegrown E-Business Suite, for a new generation of applications in the cloud era.

Oracle’s Fusion Applications saga

Oracle first invoked the word “Fusion” in 2005, under the promise it would deliver an integrated applications suite that comprised a superset of functionality from its E-Business Suite, PeopleSoft and Siebel software, with both cloud and on-premises deployment options.

The company also pledged that Fusion apps would deliver a consumer-grade user experience and business intelligence embedded throughout processes.

Fusion Applications were supposed to become generally available in 2008, but Oracle didn’t make these applications generally available to all customers until 2011.

It’s been suggested that Oracle wanted to take its time and had the luxury of doing so, since its installed base was still weathering a recession and had little appetite for a major application migration, no matter how useful the new software was.

Fusion Applications’ sheer scope was another factor. “It takes a long time to build software from scratch, especially if you have to replace things that were strong category leaders,” Mueller said.

Oracle’s main shortcoming with Fusion Applications was its inability to sell very much of them early on, Mueller added.

Oracle acquires Hyperion and BEA

After its applications shopping spree, Oracle eyed other areas of software. First, it bought enterprise performance management vendor Hyperion in 2007 for $3.3 billion to bolster its financials and BI business.

“Hyperion was a smart acquisition to get customers,” Mueller said. “It helped Oracle sell financials. But it didn’t help them in the move to cloud.”

In contrast, BEA and its well-respected application server did. The $8.5 billion deal also gave Oracle access to a large customer base and many developers, Mueller added.

John Rymer, ForresterJohn Rymer

BEA’s products also gave a boost to Oracle’s existing Fusion Middleware portfolio, said John Rymer, an analyst at Forrester. “At the time, Oracle’s big competitor in middleware was IBM,” he said. “[Oracle] didn’t have credibility.”

Oracle’s hardware play

Oracle made a major strategic shift in 2008 with the introduction of Exadata, its first foray into hardware.

Exadata packs servers, networking and storage, along with Oracle database and other software, into preconfigured racks. Oracle also created storage processing software for the machines, which its marketing arm initially dubbed “engineered systems.”

With the move, Oracle sought to take a bigger hold in the data warehousing market against the likes of Teradata and Netezza, which was subsequently acquired by IBM.

Exadata was a huge move for Oracle, Monash said.

“They really did architect hardware around software requirements,” he said. “And they attempted to change their business relationship with customers accordingly. … For context, recall that one of Oracle’s top features in its hypergrowth years in the 1980s was hardware portability.”

In fact, it would have been disastrous if Oracle didn’t come up with Exadata, according to Monash.

“Oracle was being pummeled by independent analytics DBMS vendors, appliance-based or others,” he said. “The competition was more cost-effective, naturally, but Exadata was good enough to stem much of the bleeding.”

Steve DahebSteve Daheb

Exadata and its relatives are foundational to Oracle’s IaaS, and the company also offers the systems on-premises through its Cloud at Customer program.

“We offer customers choice,” said Steve Daheb, senior vice president of Oracle Cloud. “If customers want to deploy [Oracle software] on IBM or HP [gear], you could do that. But we also continue to see this constant theme in tech, where things get complicated and then they get aggregated.”

Oracle buys Sun Microsystems

Few Oracle acquisitions were as controversial as its $7.4 billion move to buy Sun Microsystems. Critics of the deal bemoaned the potential fate of open-source technologies such as the MySQL database and the Java programming language under Oracle’s ownership, and the deal faced serious scrutiny from European regulators.

Oracle ultimately made a series of commitments about MySQL, which it promised to uphold for five years, and the deal won approval in early 2010.

Sun’s hardware became a platform for Exadata and other Oracle appliances. MySQL has chugged along with regular updates, contrary to some expectations that it would be killed off.

But many other Sun-related technologies fell into the darkness, such as Solaris and Sun’s early version of an AWS-style IaaS. Oracle also moved Java EE to the Eclipse Foundation, although it maintains tight hold over Java SE.

The Sun deal remains relevant today, given how it ties into Ellison’s long-term vision of making Oracle the IBM for the 21st century, Mueller said.

That aspiration realized would see Oracle become a “chip-to-click” technology provider, spanning silicon to end-user applications, he added. “The verdict is kind of still out over whether that is going to work.”

Oracle Database 12c

The company made a slight but telling change to its database naming convention with the 2013 release of 12c, swapping consonants for one that denoted “cloud,” rather than “g” for grid computing.

Oracle’s first iteration of 12c had multitenancy as a marquee feature. SaaS vendors at the time predominantly used multitenancy at the application level, with many customers sharing the same instance of an app. This approach makes it easier to apply updates across many customers’ apps, but is inherently weaker for security, Ellison contended.

Oracle 12c’s multi-tenant option provided an architecture where one container database held many “pluggable” databases.

Oracle later rolled out an in-memory option to compete with SAP’s HANA in-memory database. SAP hoped its customers, many of which used Oracle’s database as an underlying store, would migrate onto HANA.

2016: Oracle acquires NetSuite

Oracle’s $9.3 billion purchase of cloud ERP vendor NetSuite came with controversy, given Ellison’s large personal financial stake in the vendor. But on a strategic level, the move made plenty of sense.

NetSuite at the time had more than 10,000 customers, predominantly in the small and medium-sized business range. Oracle, in contrast, had 1,000 or so customers for its cloud ERP aimed at large enterprises, and not much presence in SMB.

Thus, the move plugged a major gap for Oracle. It also came as Oracle and NetSuite began to compete with each other at the margins for customers of a certain size.

Oracle’s move also gave it a coherent two-tier ERP strategy, wherein a customer that opens new offices would use NetSuite in those locations while tying it back to a central Oracle ERP system. This is a practice rival SAP has used with Business ByDesign, its cloud ERP product for SMBs, as well as Business One.

The NetSuite acquisition was practically destined from the start, said Scavo of Strativa.

“I always thought Larry was smart not to do the NetSuite experiment internally. NetSuite was able to develop its product as a cloud ERP system long before anyone dreamed of doing that,” Scavo said.

NetSuite customers could benefit as the software moves onto Oracle’s IaaS if they receive the promised benefits of better performance and elasticity, which NetSuite has grappled with at times, Scavo added. “I’m looking forward to seeing some evidence of that.”

Oracle launches its second-generation IaaS cloud

The IaaS market has largely coalesced around three players in hyperscale IaaS: AWS, Microsoft and Google. Other large companies such as Cisco and HPE tried something similar, but ceded defeat and now position themselves as neutral middle players keen to help customers navigate and manage multi-cloud deployments.

Oracle, meanwhile, came to market with an initial public IaaS offering based in part on OpenStack, but it failed to gain much traction. It subsequently made major investments in a second-generation IaaS, called Oracle Cloud Infrastructure, which offers many advancements at the compute, network and storage layers over the original.

With [on-premises software] we had to make it work with everybody. Part of it is working together to bring that to the cloud.
Steve DahebSenior vice president, Oracle Cloud

Oracle has again shifted gears, evidenced by its partnership with Microsoft to boost interoperability between Oracle Cloud Infrastructure and Azure. One expected use case is for IT pros to run their enterprise application logic and presentation tiers on Azure, while tying back to Oracle’s Autonomous Database on the Oracle cloud.

“We started this a while back and it’s something customers asked for,” Oracle’s Daheb said. There was significant development work involved and given the companies’ shared interests, the deal was natural, according to Daheb.

“If you think about this world we came from, with [on-premises software], we had to make it work with everybody,” Daheb said. “Part of it is working together to bring that to the cloud.”

Oracle Autonomous Database marks the path forward

Ellison will unveil updates to Oracle database 19c, which runs both on-premises and in the cloud, in a talk at OpenWorld. While details remain under wraps, it is safe to assume the news will involve autonomous management and maintenance capabilities Oracle first discussed in 2017.

Oracle database customers typically wait a couple of years before upgrading to a new version, preferring to let early adopters work through any remaining bugs and stability issues. Version 19c arrived in January, but is more mature than the name suggests. Oracle moved to a yearly naming convention and update path in 2018, and thus 19c is considered the final iteration of the 12c release cycle, which dates to 2013.

Oracle users should be mindful that autonomous database features have been a staple of database systems for decades, according to Monash.

But Oracle has indeed accomplished something special with its cloud-based Autonomous Database, according to Daheb. He referred to an Oracle marketing intern who was able to set up databases in just a couple of minutes on the Oracle Cloud version. “For us, cloud is the great democratizer,” Daheb said.

Go to Original Article
Author:

Oracle cloud ambitions follow decades of transition

Oracle’s roots as an on-premises software company have made for a complicated and at times contradictory relationship with cloud computing over the last decade, and some say the company can’t afford to lose any more ground.

After all, in 2008, the software giant’s outspoken founder Larry Ellison mocked the very notion of the phrase, saying cloud amounted to a rebranding of existing technologies. Two years later, Ellison launched Exalogic, an application server appliance he dubbed “one big, honkin’ cloud.”

Oracle cloud beginnings and missteps

Prominent examples abound of Oracle’s efforts to lead the way in the Internet era, such as Ellison’s network computer offering from the mid- to late 1990s. It failed at the time, but foreshadowed the rise of products such as Chromebooks — stripped-down thin client computing devices that rely heavily on connections to the web.

More recently, Oracle — like IBM, Cisco and HPE — found itself outgunned in the cloud computing platform race by AWS and Microsoft. Oracle offers IaaS to customers, but has positioned it for more specialized tasks.

Last year, Ellison’s longtime head of product development, Thomas Kurian, decamped and turned up as CEO of Google Cloud. Published reports have it that Kurian left in part because Ellison was too reluctant to embrace partnerships with other cloud providers. That changed in June, when Oracle and Microsoft created a cloud interoperability pact.

Oracle struck a partnership deal with Microsoft to improve its footing in the cloud computing market.
Microsoft and Oracle struck a win-win deal to boost each company’s cloud clout.

Ellison has named no replacement for Kurian, and in fact has taken over the job at age 75. While Oracle seems to have settled on a long-term strategy for IaaS, and has had great success selling SaaS applications, Oracle’s challenge centers on PaaS — most specifically Oracle 19c, the latest version of its flagship database product.

The task at hand is to keep Oracle’s customer base wherever they want to be, whether on premises or on Oracle cloud, and to be competitive on price, as IT pros have more database options than ever before — particularly in open source.

Overall, Ellison’s tone and message to the OpenWorld conference attendees later this month will be critical.

“His last act had better be figuring the cloud out,” said John Rymer, an analyst at Forrester Research. “Cloud is that kind of moment for Oracle. If they don’t get this right, they don’t get to continue to play, and they become legacy.”

If they don’t get [cloud] right, they don’t get to continue to play, and they become legacy.
John RymerAnalyst, Forrester

Ellison, as always, is sure to use the company’s annual conference to sling arrows at competitors in an effort to boost Oracle in the cloud. The conference agenda shows that Oracle Cloud Infrastructure (OCI), Oracle’s next-generation IaaS, will play a prominent role through sessions, customer presentations and in a keynote showcasing new features.

But the star should be the Oracle database, with more than 200 OpenWorld sessions associated with it. Expect Ellison to have plenty to say about it on his own.

 In part two of this story, we look back at events of the past 20 years that brought Oracle to its present position in the cloud computing market.

Go to Original Article
Author:

On-premises pricing pushes Atlanta to Oracle ERP Cloud

The city of Atlanta is moving to Oracle’s full cloud for human resources, procurement and finance. To help win the deal, the city released eyebrow-raising cost estimates that show the city has little choice but to move to Oracle’s ERP/HCM Cloud platform.

Atlanta is a longtime Oracle user. Its last big ERP upgrade was around 2007. This time, it was planning on a hybrid cloud adoption, keeping some systems on premises and others in Oracle ERP Cloud. The city didn’t believe all of the Oracle ERP Cloud offerings were on par with the on-premises systems, hence the hybrid approach. This view changed as the planning progressed.

For Oracle, getting customers to migrate to its cloud platform is a top priority. But the financial incentives behind these deals are rarely disclosed, at least until Atlanta offered a glimpse at some of the cost estimates.

The Atlanta City Council finance committee was shown a series of slides that sketched out the financial case for a full cloud approach. Officials were told that the 10-year total cost of ownership difference between Oracle’s E-Business Suite (EBS)/HCM Cloud and Oracle’s full ERP/HCM Cloud was $26 million. That’s how much more the city would spend over a 10-year period if it went with a hybrid approach.

Oracle’s licensing terms between the two platforms were starkly different. Under the hybrid approach, the annual licensing would see a “4% increase per year for EBS/HCM Cloud hybrid (until year 10) vs. 0% increase until year 5” for the ERP Cloud. That full ERP Cloud saw a one-time 3% increase in year six over the 10-year agreement.

Analysts and consultants who have seen the slides say there’s not enough information to tell, exactly, how these estimates were calculated. However, the differences in licensing costs between hybrid, on-premises and full cloud ERP delivers a clear message.

“I assumed that this was Oracle’s way of financially motivating the decision they wanted,” said Marc Tanowitz, a managing director at Pace Harmon, a management consultancy that advises firms making similar decisions.

The Atlanta mayor’s office declined to make an official available for an interview or to answer written questions. A spokeswoman said the city would not comment. In addition, Oracle said it couldn’t discuss a specific customer agreement.

At the start of this project, Oracle’s HCM Cloud was described by Atlanta officials as mature and ready for full cloud deployment. The city initially concluded that there were functionality gaps in the finance system, and it intended to keep Oracle’s R12 financials on premises. That changed.

“Over the last six to eight months, Oracle has released new functionality to where we feel like those gaps will be addressed,” said John Gaffney, the city’s deputy chief financial officer, according to a video — discussion at the Oct. 25 meeting begins at about 2:17 in the video — of a recent city council finance meeting. That meant recommending a full cloud option.

Atlanta City Council members at the meeting didn’t probe the licensing difference. Gaffney, in presenting the savings, told them that “you’ve got lower costs that are primarily driven by your subscription cost being lower. You also don’t have to pay any hosting fees.”

Tanowitz said there were some things about Atlanta’s Oracle ERP Cloud project that were clear; the apparent 10-year agreement with Atlanta, for instance. Vendors have generally been seeking longer terms.

“That piece of it didn’t surprise us,” he said.

The first-year implementation cost for hybrid and full Oracle ERP Cloud were roughly equal, at about $19 million. That figure also wasn’t surprising to Tanowitz because there is a cost to migration. But Tanowitz said he struggles to understand why the on-premises deployment is escalating in cost faster than the full Oracle ERP Cloud deployment.

“If you think about the cloud cost, what are you paying for in a cloud subscription? You’re paying for some intellectual property and you’re paying for some hosting,” said Tanowitz. “That’s what’s under that number, if you peel it apart.”

“Why would an environment that I’m hosting on my own — presumably with the EBS deal — be going up at this rate?” he asked.

There has been a long-standing debate in IT about whether on premises is less costly than full cloud approaches. Frank Scavo, president of Computer Economics, a research firm, said the decision on these approaches can go either way.

“If the data center is underutilized, adding another application may not add much cost,” he said. “But if I need to build a new data center or add significant capacity, it will be much more costly. There is no right answer.”